| There is a growing interest in modeling the demand for prescription drugs and understanding physicians' response to marketing communication. Measuring the response to marketing communication without accounting for persistence (and heterogeneity) can significantly bias the estimates of physician response and lead to ineffective budget allocations. Though studies in the medical literature have suggested that physician decision making is often inertial, it is yet unclear whether persistence is an important phenomenon in physician drug choice.;Capitalizing on a rich panel dataset of physician prescriptions and of competitive marketing activity, I investigate physician persistence in drug choice. I propose that physicians might exhibit persistence to minimize on search and learning costs. For each new patient visit, I then jointly model the likelihood of physician persistence and the physician's drug choice decision. Unlike Bayesian learning models, the proposed individual-level, heterogeneous and dynamic two-state model does not assume all physicians are constantly engaged in costly information search and processing. I explore the role of marketing communication on persistence and drug choice, and I investigate whether physicians who exhibit persistence respond differently to three forms of marketing communication: one-to-one meetings (detailing), outside the office meetings, and symposium meetings.;The results show significant levels of persistence in drug choice. Physicians do not frequently change state and they tend to be either persistent or non-persistent. Non-persistent physicians appear to be responsive to detailing and symposium meetings, whereas persistent physicians seem to be responsive only to symposium meetings. Outside the office events, such as golf or lunch, have no effect on physician choice. Finally, I find that (1) detailing and symposiums can have long-lasting effects, (2) older physicians and those who work in smaller practices are more likely to be persistent, and (3) the more a physician is willing to receive sales force representatives, the higher the likelihood of being persistent. Finally, I discuss alternatives to improve marketing communication allocations from my rich set of results. |
